Hag
4.
During this time Hong Kong were not in a position to apply a freeze to Kuwaiti or Iraqui assets in the same way
that the UK had been able to under the Emergency Laws
(Re-enactments and Appeals) Act 1964, which came into force
at 2.00 GMT on 2 August.
5. Mr Keswick complains that because the Hong Kong
Government did not take immediate action to freeze Kuwaiti
assets, this delay contributed to the relatively sharp fall
in the prices in Hong Kong compared to other markets.
6.
There was a large drop in Hong Kong share prices on
Monday 6 August te 7.4% although this was not all that out
of line with several other countries, eg Zurich 7.3%,
Sinapore 6.35%, Frankfurt 5.4%. There could be a number of
contributing factors which would explain this drop apart
from selling of Kuwaiti assets:
Msen sharply over the last few weeks (i) The Hong Kong market had been overvalued for some-
time and was due for correction. The fall in share prices was therefore not surprising for this reason, coupled with the market's perception of Hong Kong as particularly vulnerable to global recession caused by
^ higher oil prices.
(ii)
Hong Kong, unlike a number of other markets, has a
・ would have been one day settlement system which is attractive to
Seeking investors whekk to ensure they have a sufficient pool
of liquidity to meet emergencies.
(iii) Turn-over on 6 August was not exceptional and was
in fact lower than on 7 and 8 August, by which time the
freeze had taken effect.
BUSAHL/2